When is global cash flow needed? What if a business can qualify for a loan with its cash flow alone? Do additional businesses owned by one or more of the guarantors have to be reviewed? Examiners expect to see a consistently applied global debt service coverage methodology, and your lending staff must be able to provide clear and consistent answers when asked. For example, who should be included? Do you use the EBITDA or UCA method, and why? What level of financial detail is needed for various related entities? What numbers are used: operating profit, net profit, or another number? How is debt repayment determined without complete debt schedules from each entity? This presentation will address key decisions and processes in global cash flow calculations.
- Reasoning behind performing a global analysis
- Key decisions
- Who to include in a global cash flow analysis
- Information needed for operating entities and individual guarantors
- Depth of analysis depending on the complexity of the borrower and transaction
- Calculating cash flow using both traditional EBITDA and UCA analyses
- Key differences, strengths, and weaknesses of each
- Determining global debt service coverage
- Potential pitfalls, including double counting
- Treatment of distributions from Sub S and partnership entities
- Best practices when considering debt repayment requirements (i.e., treatment of credit lines)
- Other global analysis considerations, including liquidity and capital
- TAKE-AWAY TOOLKIT
- Employee training log
- Quiz to measure staff learning and a separate answer key
WHO SHOULD ATTEND?
This informative session will benefit beginning- and intermediate-level credit personnel, including credit analysts, commercial loan underwriters, general loan officers, loan review personnel, loan committee members, and credit-risk managers.
SPEAKER: Aaron Lewis, Young & Associates, Inc.
Aaron Lewis is a consultant in the lending and compliance divisions of Young and Associates. As a consultant, he assists clients by performing loan reviews and ALLL methodology reviews. In addition, he has performed reviews in lending compliance and quality control. Prior to joining Young and Associates, Aaron was employed by a community bank in southeast Michigan for eleven years. He worked his way through various facets of the operation from frontline service, to branch management, to Vice President, Credit Administrator. He also has secondary market, compliance, and asset quality experience. Aaron holds a Bachelor’s in finance from Michigan State University and graduated from the Graduate School of Banking, University of Wisconsin.